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Tuesday, April 13, 2010

REYKJAVIK, Iceland (UPI) -- An Icelandic inquiry into the 2008 collapse of its banking system found fault with key bankers, politicians and excessive growth of the industry since 2001. The Special Investigation Commission of Iceland's parliament issued harsh criticism of many officials, including former prime minister Geir Haarde, central bank Chairman David Oddsson, central bank governors and bank regulators, the EUobserver reported Tuesday. The report says underlying the collapse was a growth spurt in the banking industry, which grew twenty-fold in seven years, running far past the point where it could cover its bets. Reflecting the sweeping criticism, Prime Minister Johanna Sigurdardottir said: "The private banks failed, the supervisory system failed, the politics failed, the administration failed, the media failed, and the ideology of an unregulated free market utterly failed."The report said regulators "did not enforce the legal provisions which were at its disposal even when they saw laws being broken." The banks' largest shareholders "had an abnormally easy access to loans in these banks," the report said. The Central Bank of Iceland held only a fraction of the necessary foreign currency reserves needed to protect either of the country's three large banks, Glitner, Kaupthing or Landsbanki. When the collapse occurred, the central bank could not protect one, let alone all three, the report said.